Investment Commentary
Galectin Therapeutics is the other major player in the NAFLD/NASH space, developing carbohydrate-based drug candidates for fibrotic liver (and cancer) conditions. Galectin has chosen to go after a difficult population of NAFLD patients, those with NASH with advanced fibrosis. This is an important distinction from Intercept and Galmed, as Galectin is hoping to show not only a reduction in fat accumulation as its peers are aiming to demonstrate, but also a reversal to fibrotic damage in the liver in more advanced patients. There is a further distinction in tackling the more advanced class of patients in that there is no clear set of standards in the pathogenesis of NAFLD to determine which patients will advance to NASH, cirrhosis or related conditions, so while halting the accumulation of fat is certainly paramount, reversing the damage is unprecedented.
Catalysts on the Horizon for Companies Developing NAFLD and NASH Drugs
Published Thursday, June 26, 2014 by Fred Zucker
Galectin Therapeutics is the other major player in the NAFLD/NASH space, developing carbohydrate-based drug candidates for fibrotic liver (and cancer) conditions. Galectin has chosen to go after a difficult population of NAFLD patients, those with NASH with advanced fibrosis. This is an important distinction from Intercept and Galmed, as Galectin is hoping to show not only a reduction in fat accumulation as its peers are aiming to demonstrate, but also a reversal to fibrotic damage in the liver in more advanced patients. There is a further distinction in tackling the more advanced class of patients in that there is no clear set of standards in the pathogenesis of NAFLD to determine which patients will advance to NASH, cirrhosis or related conditions, so while halting the accumulation of fat is certainly paramount, reversing the damage is unprecedented.
Catalysts on the Horizon for Companies Developing NAFLD and NASH Drugs
Published Thursday, June 26, 2014 by Fred Zucker
Those following the developments of Intercept Pharmaceuticals (NASDAQ: ICPT), Galectin Therapeutics (NASDAQ: GALT) and Galmed Pharmaceuticals (NASDAQ: GLMD) are keenly aware of the tendency of fatty liver disease drug developers to move in unity upon news of clinical research. The lack of viable treatments, increasing diagnosis rates and the economic burden associated with fatty livers has put a spotlight on the limited number of companies pursuing the indication, keeping investors on the lookout for news with market moving potential.
The Growing Prevalence of Fatty Liver Disease
Thirty years ago, nonalcoholic fatty liver disease (NAFLD) did not even have a medical name, as physicians and researchers presumed the buildup of fat in the liver to be essentially benign. With the advent of drugs to better treat hepatitis C, NAFLD is now the face of liver disease in the U.S. with a library of research documenting that fat accumulation in the liver can lead to nonalcoholic steatohepatitis (NASH), cirrhosis of the liver, eventual liver failure and death. Cases of NAFLD have doubled in the past two decades, while prevalence of other liver diseases has remained stable or even decreased, positioning NAFLD to overtake hepatitis C as the leading case of liver transplants by 2020. Moreover, there are no approved drugs to treat any of these diseases, which are generally asymptomatic until advanced stages, resulting in the dubious distinction of being “silent” killers. Worse yet, a liver transplant is the only viable treatment option for cirrhosis patients, but the fact that only about 6,300 liver transplants happen each year in the U.S. leaves a bleak prognosis.
The growing prevalence of NAFLD, which causes the liver to balloon with fat, is sounding alarms in the medical community. At first, the disease was not found in children as it typically takes years and years to develop, yet today about 10 percent of youths in the U.S. are estimated to have NAFLD. A conservative estimate is that approximately 20 percent of adults in the U.S. suffer from NAFLD, with the World Gastroenterology Organisation Global Guidelines report in 2012 estimating that NASH affects 30 percent of the population in developed countries worldwide. Closely ties to obesity, NAFLD affects at least 50 percent of all obese adult men, with some estimates ranging up to 80 percent. Looking directly at NASH, the U.S. Department of Health and Human Services shows that up to 5 percent of the population, about 15.7 million people, suffer from the more severe form of NAFLD.
The comorbidities that are linked to the condition, including liver cancer, heart disease and Type 2 diabetes, have limited effective therapeutic options as well, creating a vortex of illness and death with NAFLD at the epicenter. All of this explains the recent surge in investment interest in companies developing new drugs to treat any stage of a fatty liver.
Upcoming Catalysts for NASH Players
Intercept Pharma is the most widely heralded biotech pursuing a NAFLD therapy and its rise in value is nothing shy of impressive, mushrooming from an IPO price near $20 per share in October 2012 to $70 per share a year later and then going parabolic to as high as $497 per share in January. The value driver has been Intercept’s promising drug obeticholic acid (OCA), which has shown in trials to be effecting in treating patients with NASH. In January, a 283-patient Phase 2 trial of OCA for NASH, called the FLINT trial, was stopped one year early because it had satisfied its primary endpoints of safety and providing a significant effect on liver damage caused by NASH.
The latest good news for Intercept came in late May when the U.S. Food and Drug Administration awarded the company “Fast Track” status for OCA, a first-in-class farnesoid X receptor agonist, for treating patients suffering from primary biliary cirrhosis (PBC) who do not respond to ursodiol. Ursodiol is the only drug approved to treat PBC, a disease characterized by bile ducts in the liver being slowly destroyed, which can lead to irreversible scarring of the liver. Note, this is not NASH, but it is promising for OCA in general as Intercept gears up to submit a New Drug Application to the FDA for the indication in mid-2015.
Those choosing to short ICPT are focused on mumblings that the company downplayed increased LDL cholesterol levels in its FLINT trial, which could raise safety concerns, as lipid abnormalities are often associated with risk of cardiovascular events. ICPT bulls oppose this position, including Wedbush Capital, saying much ado is being made about nothing. All patients stopped dosing in January, when the trial was halted early, and were put on a pre-specified 24-week observational phase.
This aligns Intercept for a potential sharp move in share value when final data from the trial, including the observational stage, is released. To give you an idea of the interest in that data, Intercept’s stock price dove about 7% yesterday when the company indicated at the JMP Securities Healthcare Conference that full results would likely not be released in July as previously anticipated.
Galmed, a newbie in the public domain (IPO in March), joined in the NASH race unintentionally at first, but has drawn the attention of the investment community based upon its findings. Galmed’s experimental oral drug aramchol, a conjugate of Cholic acid and Arachidic acid, was accidentally discovered to reduce liver fat infiltration in animal models with high-fat diets during research to solubilize bile stones. A Phase 2 study showed aramchol to be safe and effective in reducing liver fat content and improve metabolic parameters associated with NAFLD.
Galmed was hoping to initiate a 120-patient Phase 2b aramchol study late in 2013 for NASH in obese patients with insulin resistance, but the FDA recommended that the Tel Aviv, Israel-based company first run pharmacokinetic and food effect studies. Patient screening got underway at the end of April. The Phase 2b study, which is expected to take about 15 months, is now planned for the fourth quarter of this year. With about $40 million in cash from raises, Galmed thinks it has enough cash to get through 2017.
Galectin Therapeutics is the other major player in the NAFLD/NASH space, developing carbohydrate-based drug candidates for fibrotic liver (and cancer) conditions. Galectin has chosen to go after a difficult population of NAFLD patients, those with NASH with advanced fibrosis. This is an important distinction from Intercept and Galmed, as Galectin is hoping to show not only a reduction in fat accumulation as its peers are aiming to demonstrate, but also a reversal to fibrotic damage in the liver in more advanced patients. There is a further distinction in tackling the more advanced class of patients in that there is no clear set of standards in the pathogenesis of NAFLD to determine which patients will advance to NASH, cirrhosis or related conditions, so while halting the accumulation of fat is certainly paramount, reversing the damage is unprecedented.
In 2013, Galectin received a Fast Track designation from the FDA to expedite development of its drug GR-MD-02 for NASH patients with advanced hepatic fibrosis.
Galectin disclosed in April that it has completed enrollment in the second cohort of the trial, good news following a prior announcement that data from the first cohort showed the therapy to be safe and well tolerated. The data further showed positive changes in pre-defined biomarkers for the trial, suggesting efficacy, although that is never a primary endpoint of early-stage clinical trials. Dosing of GR-MD-02 for the second cohort was doubled from the first cohort, putting investors on close watch for results, which are slated for the latter part of next month.
With more than $36 million in cash on hand at the end of the first quarter, Galectin is plenty well financed to complete the Phase 1 trial of its drug, as well as other research throughout 2015. To that point, Galectin has conducted some compelling lab studies to further support the potential of GR-MD-02, including data from a pre-clinical trial in a diabetic mouse model with NASH released on Monday.
In the study, treatment with GR-MD-02 for four weeks significantly reduced liver weight, liver-to-body weight ratio and plasma triglyceride levels in mice with induced NASH. Blood biomarkers that are indicative of liver damage, such as aspartate aminotransferase, plasma alanine aminotransferase and plasma total bilirubin, also showed reductions back near normal levels in the treated mice. Further, the backbone of Galectin research was supported by the study, showing a significant reduction in fibrosis of the liver. Perhaps the most important aspect of this trial is that the mice were given oral treatments, as opposed to the intravenous administration in the Phase 1 human trials. The potential market for oral delivery is distinct and additive to the potential market for IV treatments. Every disease has a target product profile and while IV administration will provide the best results in some indications, oral delivery can be more appropriate for others, such as chronic diseases and conditions. This development bears watching over the long term as Galectin advances their clinical programs.
Adding to the interest in Galectin on Monday, analysts Aegis Capital reiterated their “buy” rating on the stock. In April, analysts at MLV & Co. put out a “buy” rating on GALT and boosted their price target from $20 to $27.
Why Pay Attention Now
Safety and tolerability are obviously imperative in studies, but the meat and potatoes of a trial is efficacy, something that investors and analysts will be trying to glean from every data set released by Galectin. Investors know the value of a drug to treat the growing NAFLD population that has out of the blue reached epidemic proportion, and remember the multi-billion-dollar jump in valuation for Intercept on its trial news in January. The fact that there are few companies entrenched in NASH research bolsters the interest in each upon optimistic data.
Galmed has not disclosed the date for completing its PK/food effect study, but it cannot be too far off in the distance in order to initiate the mid-stage trial of aramchol that it has planned this year. Intercept and Galectin both have data anticipated late next month (or perhaps later in Intercept’s case), the type of data that can have market-moving potential. The stock prices of the companies have mostly undulated in unison, including all three trading higher since Intercept’s PBC Fast Track news late in May and jumping at the opening bell Monday after Galectin released its pre-clinical data, so upcoming news in the coming weeks is likely to draw further attention to the space.
The Growing Prevalence of Fatty Liver Disease
Thirty years ago, nonalcoholic fatty liver disease (NAFLD) did not even have a medical name, as physicians and researchers presumed the buildup of fat in the liver to be essentially benign. With the advent of drugs to better treat hepatitis C, NAFLD is now the face of liver disease in the U.S. with a library of research documenting that fat accumulation in the liver can lead to nonalcoholic steatohepatitis (NASH), cirrhosis of the liver, eventual liver failure and death. Cases of NAFLD have doubled in the past two decades, while prevalence of other liver diseases has remained stable or even decreased, positioning NAFLD to overtake hepatitis C as the leading case of liver transplants by 2020. Moreover, there are no approved drugs to treat any of these diseases, which are generally asymptomatic until advanced stages, resulting in the dubious distinction of being “silent” killers. Worse yet, a liver transplant is the only viable treatment option for cirrhosis patients, but the fact that only about 6,300 liver transplants happen each year in the U.S. leaves a bleak prognosis.
The growing prevalence of NAFLD, which causes the liver to balloon with fat, is sounding alarms in the medical community. At first, the disease was not found in children as it typically takes years and years to develop, yet today about 10 percent of youths in the U.S. are estimated to have NAFLD. A conservative estimate is that approximately 20 percent of adults in the U.S. suffer from NAFLD, with the World Gastroenterology Organisation Global Guidelines report in 2012 estimating that NASH affects 30 percent of the population in developed countries worldwide. Closely ties to obesity, NAFLD affects at least 50 percent of all obese adult men, with some estimates ranging up to 80 percent. Looking directly at NASH, the U.S. Department of Health and Human Services shows that up to 5 percent of the population, about 15.7 million people, suffer from the more severe form of NAFLD.
The comorbidities that are linked to the condition, including liver cancer, heart disease and Type 2 diabetes, have limited effective therapeutic options as well, creating a vortex of illness and death with NAFLD at the epicenter. All of this explains the recent surge in investment interest in companies developing new drugs to treat any stage of a fatty liver.
Upcoming Catalysts for NASH Players
Intercept Pharma is the most widely heralded biotech pursuing a NAFLD therapy and its rise in value is nothing shy of impressive, mushrooming from an IPO price near $20 per share in October 2012 to $70 per share a year later and then going parabolic to as high as $497 per share in January. The value driver has been Intercept’s promising drug obeticholic acid (OCA), which has shown in trials to be effecting in treating patients with NASH. In January, a 283-patient Phase 2 trial of OCA for NASH, called the FLINT trial, was stopped one year early because it had satisfied its primary endpoints of safety and providing a significant effect on liver damage caused by NASH.
The latest good news for Intercept came in late May when the U.S. Food and Drug Administration awarded the company “Fast Track” status for OCA, a first-in-class farnesoid X receptor agonist, for treating patients suffering from primary biliary cirrhosis (PBC) who do not respond to ursodiol. Ursodiol is the only drug approved to treat PBC, a disease characterized by bile ducts in the liver being slowly destroyed, which can lead to irreversible scarring of the liver. Note, this is not NASH, but it is promising for OCA in general as Intercept gears up to submit a New Drug Application to the FDA for the indication in mid-2015.
Those choosing to short ICPT are focused on mumblings that the company downplayed increased LDL cholesterol levels in its FLINT trial, which could raise safety concerns, as lipid abnormalities are often associated with risk of cardiovascular events. ICPT bulls oppose this position, including Wedbush Capital, saying much ado is being made about nothing. All patients stopped dosing in January, when the trial was halted early, and were put on a pre-specified 24-week observational phase.
This aligns Intercept for a potential sharp move in share value when final data from the trial, including the observational stage, is released. To give you an idea of the interest in that data, Intercept’s stock price dove about 7% yesterday when the company indicated at the JMP Securities Healthcare Conference that full results would likely not be released in July as previously anticipated.
Galmed, a newbie in the public domain (IPO in March), joined in the NASH race unintentionally at first, but has drawn the attention of the investment community based upon its findings. Galmed’s experimental oral drug aramchol, a conjugate of Cholic acid and Arachidic acid, was accidentally discovered to reduce liver fat infiltration in animal models with high-fat diets during research to solubilize bile stones. A Phase 2 study showed aramchol to be safe and effective in reducing liver fat content and improve metabolic parameters associated with NAFLD.
Galmed was hoping to initiate a 120-patient Phase 2b aramchol study late in 2013 for NASH in obese patients with insulin resistance, but the FDA recommended that the Tel Aviv, Israel-based company first run pharmacokinetic and food effect studies. Patient screening got underway at the end of April. The Phase 2b study, which is expected to take about 15 months, is now planned for the fourth quarter of this year. With about $40 million in cash from raises, Galmed thinks it has enough cash to get through 2017.
Galectin Therapeutics is the other major player in the NAFLD/NASH space, developing carbohydrate-based drug candidates for fibrotic liver (and cancer) conditions. Galectin has chosen to go after a difficult population of NAFLD patients, those with NASH with advanced fibrosis. This is an important distinction from Intercept and Galmed, as Galectin is hoping to show not only a reduction in fat accumulation as its peers are aiming to demonstrate, but also a reversal to fibrotic damage in the liver in more advanced patients. There is a further distinction in tackling the more advanced class of patients in that there is no clear set of standards in the pathogenesis of NAFLD to determine which patients will advance to NASH, cirrhosis or related conditions, so while halting the accumulation of fat is certainly paramount, reversing the damage is unprecedented.
In 2013, Galectin received a Fast Track designation from the FDA to expedite development of its drug GR-MD-02 for NASH patients with advanced hepatic fibrosis.
Galectin disclosed in April that it has completed enrollment in the second cohort of the trial, good news following a prior announcement that data from the first cohort showed the therapy to be safe and well tolerated. The data further showed positive changes in pre-defined biomarkers for the trial, suggesting efficacy, although that is never a primary endpoint of early-stage clinical trials. Dosing of GR-MD-02 for the second cohort was doubled from the first cohort, putting investors on close watch for results, which are slated for the latter part of next month.
With more than $36 million in cash on hand at the end of the first quarter, Galectin is plenty well financed to complete the Phase 1 trial of its drug, as well as other research throughout 2015. To that point, Galectin has conducted some compelling lab studies to further support the potential of GR-MD-02, including data from a pre-clinical trial in a diabetic mouse model with NASH released on Monday.
In the study, treatment with GR-MD-02 for four weeks significantly reduced liver weight, liver-to-body weight ratio and plasma triglyceride levels in mice with induced NASH. Blood biomarkers that are indicative of liver damage, such as aspartate aminotransferase, plasma alanine aminotransferase and plasma total bilirubin, also showed reductions back near normal levels in the treated mice. Further, the backbone of Galectin research was supported by the study, showing a significant reduction in fibrosis of the liver. Perhaps the most important aspect of this trial is that the mice were given oral treatments, as opposed to the intravenous administration in the Phase 1 human trials. The potential market for oral delivery is distinct and additive to the potential market for IV treatments. Every disease has a target product profile and while IV administration will provide the best results in some indications, oral delivery can be more appropriate for others, such as chronic diseases and conditions. This development bears watching over the long term as Galectin advances their clinical programs.
Adding to the interest in Galectin on Monday, analysts Aegis Capital reiterated their “buy” rating on the stock. In April, analysts at MLV & Co. put out a “buy” rating on GALT and boosted their price target from $20 to $27.
Why Pay Attention Now
Safety and tolerability are obviously imperative in studies, but the meat and potatoes of a trial is efficacy, something that investors and analysts will be trying to glean from every data set released by Galectin. Investors know the value of a drug to treat the growing NAFLD population that has out of the blue reached epidemic proportion, and remember the multi-billion-dollar jump in valuation for Intercept on its trial news in January. The fact that there are few companies entrenched in NASH research bolsters the interest in each upon optimistic data.
Galmed has not disclosed the date for completing its PK/food effect study, but it cannot be too far off in the distance in order to initiate the mid-stage trial of aramchol that it has planned this year. Intercept and Galectin both have data anticipated late next month (or perhaps later in Intercept’s case), the type of data that can have market-moving potential. The stock prices of the companies have mostly undulated in unison, including all three trading higher since Intercept’s PBC Fast Track news late in May and jumping at the opening bell Monday after Galectin released its pre-clinical data, so upcoming news in the coming weeks is likely to draw further attention to the space.
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